INTERNATIONAL

BUSINESS
STRATEGIES
Presented to:
Prof. Mamta Brahmbhatt

By:
Gaurav Majethiya(B-24)
Poorvi Maniyar(B-27)
Prexa Mistry(B-43)
Mitesh Salunke(B-46)
Why do companies expand in foreign market?
Four big strategic issues??
Why to strategise?
 Cultural drivers
 Demographic drivers

 Market condition

 Economic and political drivers

Locational Advantages
 Manufacturing costs vary from country to country based
on
 Wage rates
 Worker productivity
 Inflation rates
 Energy costs
 Tax rates
 Government regulations
Primary Patterns of international
competetion

Multi-country
Competition

Global Competition
Multi country Competition
 Decentralized to strategic Business Unit
 Tailored to local market
 Independent in operations
 Focus on competition in each market
 Global competition
 Standardized products across national markets.
 Strategic decisions are centralized in the home
office.
 SBU are assumed to be interdependent.
 Economies of scale.
 Requires resource sharing and coordination across
borders (hard to manage).
 Global competition
 Standardized products across national markets.
 Strategic decisions are centralized in the home
office.
 SBU are assumed to be interdependent.
 Economies of scale.
 Requires resource sharing and coordination across
borders (hard to manage).
 Transnational strategy
The transnational strategy tries to simultaneously:
 achieve low costs through location economies, economies of

scale, and learning effects

 differentiate the product offering across geographic markets to

account for local differences

 foster a multidirectional flow of skills between different

subsidiaries in the firm’s global network of operations

The transnational strategy makes sense when:

 cost pressures are intense

 pressures for local responsiveness are intense

International Corporate-level Strategy
 Global Market Entry
 Exporting

 Licensing

 Franchising strategy

 Strategic alliances or joint ventures

 Exporting
 High cost, Low control

 domestic plants as a production base

 Excellent initial strategy

 Ex..Chinese companies
 Licensing

 Technical know-how or a patented product.

 Low cost, low risk, little control, low returns

Licensing
 Ex..Philip Moris..
Franchising
 Often is better suited to global expansion efforts
of service and retailing enterprises
 Advantages
 Franchisee bears most of costs and
risks of establishing foreign locations
 Franchisor has to expend only the
resources to recruit, train, and support franchisees
 Disadvantage
 Maintaining cross-country quality control
 Eg. Pizza Hut, KFC
Strategic Alliances
 Shared costs
 shared resources
 shared risks
 problems of integration (e.g., two corporate
cultures).
 Eg. GM - SAIC
What Is a “Think-Local, Act-Local”
Approach to Strategy Making?

A company varies its product

offerings and basic competitive
strategy from country to country
in an effort to be responsive to
differing buyer preferences and
market conditions.
What Is a “Think-Global, Act-Global” Approach to
Strategy Making?

A company employs the same

basic competitive approach in all

countries where it operates.

What Is a “Think-Global, Act-Local” Approach to
Strategy Making?

A company uses the same basic

competitive theme in each country but
allows local managers latitude to . . .
1. Incorporate whatever country-specific
variations in product attributes are needed to
best satisfy local buyers and
2. Make whatever adjustments in production,
distribution, and marketing are needed to
compete under local market conditions
Management Problems
 Cost of coordination across diverse geographical
business units
 Institutional and cultural barriers
 Understanding strategic intent of competitors
 The overall complexity of competition
Profit Sanctuaries
 It’s a country market where a firm
 Has a strong, protected market
position and
 Derives substantial profits

Profit sanctuaries are a valuable

competitive asset in global industries!
Cross Market Subsidization
 Involves supporting competitive offensives in one market
with resources/profits diverted from operations in other
markets
 Results from a global firm’s ability to:
 Draw upon its resources and profits in other country markets
to mount an attack on single-market or one-country rivals and
 Try to lure away their customers with
 Lower prices
 Discount promotions
 Heavy advertising
 Other offensive tactic
Achieving Global
Competitiveness via Cooperation

 Cooperative agreements with foreign companies are a

means to
 Enter a foreign market or
 Strengthen a firm’s competitiveness
in world markets
 Purpose of alliances
 Joint research efforts
 Technology-sharing
 Joint use of production or distribution facilities
 Marketing / promoting one
Global Strategic Offensives
 Attack a foreign rival’s profit sanctuaries
 Employ cross-market subsidization
 Dump goods at cut-rate prices
 Strategy Options for Local Companies
in Competing Against Global Challengers
Thank you